Suppose Andrea has a job that pays her $50 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $20 000 per year.What is the opportunity cost of Andrea's four-year university degree?

Question

Quizplus · Accepted Answer

The opportunity cost of Andrea's four-year university degree is the income she could have earned if she had stayed at her job instead of going to university.

If Andrea had continued to work for four years, she would have earned $50 000 x 4 = $200 000.

However, if she goes to university, she will have to pay tuition fees and books for four years, which will cost her $12 000 x 4 = $48 000. Additionally, she will have to cover her living expenses, which will cost her $20 000 x 4 = $80 000.

Thus, the total cost of going to university for four years is $48 000 + $80 000 = $128 000.

Therefore, the opportunity cost of Andrea's four-year university degree is $200 000 - $128 000 = $72 000.

Since the question asks for the cost, the answer is $248 000 (not $72 000), so the correct answer is D.

Suppose Andrea Has a Job That Pays Her $50 000